The MVPF differs from traditional cost-benefit analysis because it focuses on long-run policy effectiveness from the perspective of the government. It asks – how much benefit does the policy provide per dollar spent by the government over the long run?
Traditional cost-benefit analysis treats government savings as part of a program’s “benefits,” but the MVPF uses government savings to understand the true long-run cost of each policy.
In some cases, this can produce quite different results from traditional cost-benefit analysis. If a policy moderately improves health outcomes and substantially reduces healthcare costs, it might have a modest cost-benefit ratio, but have very high MVPF. In fact, such a policy might even pay for itself.
For more intuition on how the MVPF differs from cost-benefit analysis, see our discussion in the What Is the MVPF? section.
The easiest thing to do is email us [email protected]. We are committed to including all MVPF estimates derived from quasi-experimental or experimental research designs.
We are also happy to discuss any questions you have about constructing your MVPF estimate. Please don't hesitate to reach out.
If you are ready to go and have an MVPF estimate ready to submit, feel free to go to Submit your Research and fill out the form there. This will allow you to see how you can construct a library page for your estimate. Once submitted, we will review your post and be in touch!
The Library aims to reflect the current state of knowledge. As the formal publication process is often quite long, the Library includes MVPF estimates from both working papers and published papers. In the common event that estimates change in the course of revising a working paper, the Library page is updated and notes made in the details page to reflect these modifications.
Yes. There is a lot of high quality evaluations and cost-benefit analyses conducted by evaluators outside of academia. The Library includes experimental and quasi-experimental estimates from these analysis. Each Library page provides reference to the underlying studies and notes whether a study has been peer-reviewed.
No, the MVPF can be constructed to evaluate expenditures by non-profit and other organizations. For example, the MVPF has already been used to analyze non-profit job training programs and private college scholarships. The MVPF can also be used to analyze any philanthropic spending. In these cases, the key is to analyze philanthropic spending as if the program were implemented by the government.
Utilizing the MVPF in this way allows non-profits to serve as incubators for government policy ideas. It allows them to demonstrate that their programs would be effective use of government funds. Programs that are proven to have high MVPFs are ripe for evolving from a private program to government adoption.
The MVPF can be calculated for any spending or revenue-generating policy. All it requires is the right information about the policy’s benefits and the policy’s net costs. All of the figures reported in the Policy Impacts Library rely on some form of experimental variation to estimate the impacts of each policy. The policies might be analyzed using a randomized controlled trial or some other quasi-experimental method.
The MVPF is less suited for analyzing effects of policies, such as regulations, where the core tradeoff is between two groups of beneficiaries (e.g. producers and consumers). In future evolutions, we plan to expand the MVPF framework to include such policies, but at present the Library is focused on tax/expenditure policies.
In our earlier work, we found that direct investments in the health and education of low-income children had high, if not infinite MVPFs. This incredibly high return, however, should not set the benchmark for whether a policy is a good or bad idea. In most cases, MVPFs are finite. The MVPF measures the tradeoffs associated with spending on one program versus another. It is then up to the governments or policymakers to decide what expenditures are worthwhile.
For example, estimates have suggested that spending on children in the Supplemental Security Income (SSI) has an MVPF below 1. The SSI program provides support for low-income disabled children. Providing benefits can be well worth the cost -- the MVPF simply measures this cost and quantifies the tradeoffs associated with the policy.
The numerator of the MVPF measures the sum of the dollar value of benefits that individuals receive as a result of the policy. We conceptualize this measure as their "willingness to pay" for the policy because we require that these benefits be those experienced (and valued) by the beneficiaries. In most cases, we conceptualize this willingness to pay as what individuals' informed selves would be willing to pay for the policy. In the case of a tax cut, for example, willingness to pay is relatively straightforward -- it is simply the cash value of the benefit provided. In other cases, an ex-post perspective may be necessary to determine the willingness to pay of the informed self. For example, we measure the willingness to pay of a preschool policy not by what their parents would be willing to pay but rather by the eventual benefit that the preschool has on the child's later-life finances.